U.S. equity index futures red: Nasdaq 100 down >3%
Euro STOXX 600 index off ~0.4%
Dollar, gold, crude decline; bitcoin down ~4%
U.S. 10-Year Treasury yield slides to ~4.53
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DEEPSEEK THREAT DEEP-SIXING U.S. STOCK FUTURES
U.S. equity index futures are tumbling on Monday as the overwhelming popularity of an inexpensive Chinese DeepSeek artificial intelligence model is sparking a selloff in AI-related shares, with megacap stocks including Nvidia being hit especially hard.
E-mini Nasdaq 100 futures NQcv1 are collapsing more than 3%. E-mini S&P 500 futures EScv1 are down more than 2%.
In any event, traders who utilize time-based methodologies were already on alert for increased volatility, given that this week marks a milestone utilizing a projection from the 2022 bear-market low.
Additionally, during last Friday's session, the S&P 500 index .SPX flirted with a long-term resistance line, only to sell back by the close:
In early December, with this resistance line from the 1929 high providing resistance around 6,100 on a monthly basis, the S&P 500 index hit 6,099.97. The benchmark index then sold off as much as 5.4% into its mid-January low.
On Thursday, with the line now providing resistance around 6,125, the SPX ended at a record closing high of 6,118.71. On Friday, the SPX hit a record intraday high of 6,128.18 before selling back to finish at 6,101.24.
Now with e-mini S&P 500 futures suggesting a more than 2% SPX slide at Monday's open, and stocks facing event risks this week in the form of some tech-titan earnings, as well as the results of the latest FOMC meeting, and December PCE data, traders are quickly digging into the charts to check on support.
The rising 50-day moving average should be around 5,983 on Monday.
The support line from the October 2023 low and rising 100-DMA should be in the 5,870-5,855 area on Monday. This support line and the 100-DMA contained the mid-January weakness on a daily closing basis.
That said, the January 13 intraday low was at 5,773.31.
The rising 200-DMA, should be around 5,610 on Monday. The last close below the 200-DMA was on November 1, 2023. A quick decline to test this long-term moving average would put the SPX down around 8% from its record intraday high.
On renewed strength, the 6,100-6,128 area will be a tough hurdle. In February, the resistance line should ascend to around 6,150.
(Terence Gabriel)
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FOR MONDAY'S EARLIER LIVE MARKETS POSTS:
TOO MUCH UNCERTAINTY TO BE POSITIVE ON TREASURIES - CLICK HERE
WHAT COULD TAKE MARKETS DOWN? - CLICK HERE
DEEPSEEK CONCERNS SET STOXX TECH FOR WORST DAY SINCE OCT - CLICK HERE
BEFORE THE BELL: IT'S RISK OFF IN EUROPE - CLICK HERE
CHINA'S AI CHALLENGER PUTS INVESTORS ON EDGE - CLICK HERE
SPX01272025 https://tmsnrt.rs/4ga2wOp
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
